by ChumpusRex2 » Sun 10 Sep 2006, 13:13:27
$this->bbcode_second_pass_quote('', 'I') think the common thought is demand destruction. Everything from raw materials to transporting the Rm to plant, running plant, paying employees all allong the supply chain, Manufacturing, transporting finished product to matket. Everything will increase in price. As well as the finished product increasing in price in lock step with other price rises.
But, just how much will prices rise.
How much of the price of everything that you buy or do, is oil? 5%, 10%, 25%, 35%?
Oil isn't that big a factor in the US economy - it is a very big single factor, but overall, it doesn't contribute that much. In fact, when it comes down to it - oil is about 3% of spending. That means, that the price of oil must rise a long, long way to make big differences to overall prices. What's more, prices won't necessarily rise synchronously - prices will rise according to their dependance on oil. If oil rose to $150/barrel, then it's the cost of driving that would double, whereas the cost of local services may only rise a few percent. On average, I'd probably expect overall cost of living to rise by about 3%.
Inflation has been rising in recent months, but how much of that is due to oil? I don't think it's possible to attribute more than about 0.75 - 1% of the inflation rate to oil prices. The rest is most likely due to inventive credit and over-lending on property.
How much raw material goes into a disposable syringe? I can't image it's much. Hospitals pay about $2.00 for a box of 100 syringes
, and about $0.50 for a box of 100 needles. They are ordered in bulk, so transport costs are minimal. I would expect a typical hospital to order syringes 50,000 at a time.
The bulk of the costs in medical care are staff costs, insurance costs, etc. and not really raw material costs. Yes, drugs and medical equipment are expensive - but it's not really because the raw materials are expensive, but because the amount of effort that goes into making sure that they are of high quality, and safe is large - not to mention a very large proprotion goes into the lawyer fund, in case of claim.
If you look at the cost of medications, the cost of the raw materials are, generally, not high - popular medications like Tylenol & codeine wholesale at around $0.50 for a pack of 100. The reason new medications are expensive is development costs - which can approach $500 million for a new drug - and insurance costs (which can be more than 50% of the cost for 'high risk' drugs).